The Network for Greening the Financial System (NGFS) has published a guide on how central banks can make their own climate-related disclosures.

“Climate-related and environmental disclosures are an important element in the transition to a net-zero economy,” the document says.Released on Tuesday, the guide says such disclosures are “instrumental to ensure a better management of these forces and to scale up green finance.

“Broad and internationally consistent disclosure is a key component in the collective efforts to improve the resilience of the financial system.”

The Paris-based network of central banks and financial supervisors says climate-related and environmental disclosures are already being adopted across sectors of the economy.

The network — which includes the National Bank of Cambodia — says progress in bridging data gaps, standardising reporting and developing robust scenario analyses “will further contribute to climate-related disclosure.”

As a first step, the guide urges central banks to disclose climate-related governance around monetary policy, asset management, financial stability and internal operations.

In addition, central banks are encouraged to disclose strategies to identify, assess and describe climate-related risks — as well as any adaptation to such risks and opportunities.

The guide also recommends disclosure of climate-related risk management practices and integrating them with other risks.

In their foreword to the guide, NGFS chair Frank Elderson and Sabine Mauderer, chair of the network’s green finance work stream, stress that “the impacts of climate change on households, businesses, and the global economy are not the problem of future generations but our own.

“The significant increase in extreme weather events reminds us how urgently we need to transform our economies to reach climate neutrality.

“To foster this transformation, the financial system needs to mitigate climate-related risks and mobilise capital for green investments. In this context, transparency about climate-related financial risks and opportunities is essential.”

According to the Dutch and German central bankers, climate-related disclosures are a “cornerstone for greening the financial system.”

Elderson and Mauderer — board members of the European Central Bank and Deutsche Bundesbank, the German central bank — identify loss of biodiversity as an “upcoming challenge” facing central banks.

“We must not forget how much of our well-being we owe to nature. However, aggravated by climate change, biodiversity is declining faster than ever in human history.”

In its annual report on Cambodia last week, the International Monetary Fund highlighted the National Bank’s leading role in green finance, noting that it was the first ASEAN central bank to invest in green bonds.

It also noted that the National Bank had played an active role in an open-ended fund for central bank investments in green bonds launched by the Bank for International Settlements in 2019.

Source: Agency Kampuchea Press

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